By Frances Traynor
14th February 2018
Wed 22 Nov 2017 by Ellie Pierpoint
Buying a house can be a daunting prospect, whether you’re a first time buyer, or a seasoned pro, but when you’ve never gone through the process before it can be helpful to know exactly what you’re getting yourself into, how much everything should cost, and who you can turn to if it all gets a bit much!
Looking for more resources? Head to our First Time Buyers' Hub!
One of the biggest concerns that first-time buyers face is how much to save for a deposit. Of course, the bigger the deposit, the better, but this is easier said than done. Your deposit is basically how much equity you put towards your new property, and you can start from as little as 5 percent. Some mortgages will require more than this, however, with the best deals offered to those paying a 25 percent deposit, though this is often a very large amount to many first-time buyers.
The government-run Help to Buy scheme can help first-time buyers by loaning you up to 20 percent of your deposit, giving you access to some of the better mortgage rates which need a 25 percent deposit in total. You will then owe the government this, rather than your mortgage lender, and can choose to pay it back when you come to sell the property, though remember that if your property has gone up in value since you bought it, the government will need 20 percent of the current value, so it might be wise to start paying your loan back before then. See our guide on paying off Help to Buy equity for more information.
It's easy to forget all the other costs that come with buying property, especially when you’re a first time buyer. In addition to the previously mentioned cost of a deposit, you also need to budget for the mortgage lender fees, valuation fee, surveys, conveyancing costs and Stamp Duty. According to moneyadviceservice.org, your mortgage fees will consist of a booking fee of around £99-£250, a mortgage account fee of about £100-300 and the telegraphic transfer fee of £25-£50. Your mortgage lender will request a valuation survey, often through their own chosen surveyor. This cost will be passed on to you and will depend on the value of the property you are buying. Usually it will be between £150-£1,500.
On top of this you will probably want to get a Homebuyer’s Survey to ensure that your new property is a sound investment. Your conveyancing costs again will depend on the value and type of house you are buying. Use our quick quote system to find out how much this will cost. This will also give you an idea of how much Stamp Duty you will need to pay, if any. Also remember that your conveyancing fees will include charges for property searches.
These usually include:
These will usually be included in your conveyancing fees, but if you would like to learn more about them, see our short guide to conveyancing searches.
While you may want to keep costs down as low as possible, in some cases it makes more long-term sense to pay out a little more for certain things. One of these is the aforementioned surveys. A survey basically highlights any defects with the property you are buying. These can vary from damp to subsidence and everything in between, and range in cost from £300-2,000 depending on the size and value of your property. While a survey is optional (apart from the lender’s valuation survey), it is a wise investment as future issues like subsidence could end up costing you thousands to fix. If you spot the issues before agreeing to buy, you can either lower your offer in relation to the defects, or choose not to buy the property, putting you in a much better position financially.
The other service to consider paying a little more for is your conveyancing. There are many companies out there that offer rates that seem too good to be true - this is usually because they are! Unless you have the guarantee of fixed fees, you risk having extra charges added on to your bill that you did not agree to. Homeward Legal offers fixed fees as well as a ‘No Move No Fee’ guarantee, which means that if for whatever reason your house purchase falls through, we will do your conveyancing on the next property for free. So if you’re a first time buyer who would like a little more advice or peace of mind, give us a call on 0800 038 6699 or use our online quote system and we’ll guide you through the process and hopefully turn a daunting experience into a positive one!
If you're a first-time buyer, check out Homeward Legal's comprehensive First-Time Buyers' Hub where all your questions about purchasing for the very first time are covered in detail.
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